Introduction

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Sun Orange Farms is about 90km from Port Elizabeth in South Africa’s Eastern Cape. It lies in the Sundays River Valley, which has a climate and altitude ideally suited to growing citrus. It grows lemons, oranges and soft citrus including persimmons. The farm has a total area of 245ha.

Background

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Sun Orange Farms was founded by the Hannah family in 1967. In 2002 it merged with the neighbouring Ferreira farm in a joint venture that acquired additional land to expand citrus production. The substantial R35m (£3m) expansion programme included clearing 150ha of bush, laying irrigation pipes, and planting the land with a variety of citrus fruits and persimmon.

The programme relied financially on obtaining third-party investment, and its success depended on retaining and recruiting an enlarged, motivated and well-trained workforce. As the owners were keen to support empowerment of local farm workers, the solution was to go ahead as a joint equity scheme in which shares in the business are transferred to workers – this had the additional benefit of making the enterprise eligible for government funds earmarked for empowerment projects. The Sun Orange Employees’ Trust was duly established as a shareholder, comprised initially of eight permanent workers from the two farms. The state-owned Industrial Development Corporation (IDC) was the main investor, purchasing 80% of shares with funds provided by the European Investment Bank. Half of these shares were subsequently passed to the Employees’ Trust, giving it a 40% shareholding in the business. All permanent workers are members of the trust, which is overseen by a Board of Trustees consisting of five worker representatives and one management representative.

The farm has 24 permanent workers (18 men and six women) and 11 casual workers on fixed-term contracts (10 men and one woman), plus 14 seasonal workers.

Seasonal workers are housed on the farm for the duration of their contracts. Most are recruited from the former homelands of Transkei and Ciskei in the Eastern Cape, where there is high unemployment, extreme poverty, and a reliance on subsistence agriculture. Other seasonal workers are migrants from neighbouring Zimbabwe or Mozambique, escaping political and economic turmoil.

Some of the senior permanent workers live on the farm and others live in the nearby townships. Conditions there are generally poor – high unemployment, high adult illiteracy, poor housing and health, with a 20% prevalence of HIV, and accompanying social problems like alcoholism, violence and crime.

It was against this backdrop, and prior to the introduction of Black Economic Empowerment legislation outlined below, that the farm owners sought to empower their workers by making them part-owners of the business and by providing skills and training to enhance their employment opportunities. 

Export sales

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Sun Orange Farms’ total export sales in 2008 were worth R5.2m (£460,000); of this, Fairtrade sales accounted for R820,000 (£72,000), 15% of export sales. In the UK, Sun Orange Farm’s biggest Fairtrade customer, sales volumes of their citrus more than doubled between 2008 and 2009, increasing from 134,000kg to 280,000kg. In the same period, the value of Fairtrade sales rose from £166,000 to £281,000.

Broad-Based Black Economic Empowerment (B-BBEE)

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A Black Economic Empowerment programme was introduced in South Africa after the end of apartheid to redress the legacy of inequality in business ownership, management, skills and opportunity.

Fairtrade Labelling Organisations International (FLO) is responsible for setting Fairtrade standards. Its certification policy for South Africa, adopted in 2007, requires enterprises which depend on hired labour to comply with the South African Government’s Broad-Based Black Economic Empowerment Act (2003) and with the subsequent Codes of Good Practice, the framework for assessing levels of worker empowerment. B-BBEE legislation promotes black ownership of businesses, training and skills development to increase employment opportunities, and promotes employment equity for ‘historically disadvantaged individuals’.

Fairtrade

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The purpose of Fairtrade engagement with commercial farms is to contribute to the economic and social development of farm workers and their communities. This has two main elements: farms must meet Fairtrade standards based on core International Labour Organisation (ILO) conventions for the protection of workers’ rights. This includes the right to join a trade union or others workers’ organisation, the right to collective bargaining, freedom from discrimination, decent employment conditions, a safe working environment, and no forced or child labour. Secondly, as well as the Fairtrade minimum price paid for the fruit, Fairtrade provides workers with the Fairtrade premium, an additional sum to tackle poverty, improve the quality of their lives and invest in their futures.

Sun Orange Farms Community Trust was set up to manage the Fairtrade premium for the benefit of all the workers, including seasonal workers. The Trust has established a premium committee comprising five members: one appointed by management and two each elected by the members of Sun Orange Farms Community Trust and seasonal workers. Of the workers representatives, one must be female.

Investing the Fairtrade premium

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The Premium Committee has invested in some innovative projects that benefit not just the workers, but the nearby communities they live in too. These include supporting crèches in the townships of Valencia and Nomantangsanqa through renovation and buying educational materials.

School clothes for the children of all workers and for 10 orphans have been paid for using the Fairtrade premium. Other premium funds have been allocated to the Mayiduye Ndlovu Development Trust to contribute towards the school fees of nine students from the community who study at Nelson Mandela Metropolitan University. The trust aims to impact on communities by helping school leavers achieve further qualifications so they can return to work in better qualified jobs in the area and support their communities.

Premium funds have also been invested in expanding the skills training programme at Sun Orange Farms by employing an Adult Basic Education and Training (ABET) teacher three days a week. The aim is to build up worker skills to a level that will enable them to undertake higher-level training and develop specific industry skills.

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Fairtrade Foundation June 2010